RBS in limbo as axe hangs

The board of Royal Bank of Scotland aims to decide by the end of this week whether there is any chance of pursuing the bank’s preferred option of finding a single buyer for all its businesses up for sale.

If not, work will begin on selecting preferred bidders to start due diligence on RBS’s Asian and Australian operations.
ANZ Banking Group
is tipped as a frontrunner to move into the second stage of the auction should the bank’s assets be broken up by geography.

London-headquartered RBS is de-risking its business by selling out of most of its investment banking operations around the world: including cash equities, which provides broking services to institutional investors; equity capital markets, which underwrites capital raisings; and its mergers and acquisitions unit.

The sale comes after RBS posted a loss in the nine months to December 31 against a background of new regulations in Britain that will force banks in that country to separate retail banking functions from their investment bank operations.

The UK government, which owns 83 per cent of RBS, is also keen to see the bank focus on lending to households and small and mid-sized business in Britain.

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Sources close to the sale process said ANZ Banking Group was interested in RBS’s Asian and Australian operations. According to India’s The Economic Times other banks to have filed expressions of interest for the Asian assets include Singapore’s DBS, Agricultural Bank of China and Royal Bank of Canada.

A spokesman for ANZ yesterday declined to comment on the bank’s interest in RBS. In 2009, ANZ picked up parts of RBS’s operations in seven Asian countries for $687 million, close to book value.

Inside RBS’s Australian operation there is unrest that local head Stephen Williams is on holiday rather than being available to keep staff informed of the outlook for their jobs as well as calling clients.

A spokeswoman said Mr Williams was due back this Friday and had remained in regular contact with the Australian business. Lazard, the corporate advisory firm to run the auction, also declined to comment on the sales process.

RBS wants the sale process wrapped up quickly, ideally before the end of March, otherwise it will shut businesses down.

Reports from London suggest Lazard has been given five weeks to find buyers before businesses are shut down. However, one source close to RBS said this was incorrect.

“The plan is to wrap this up as soon as possible but there’s no fixed date really," the source said.

He described the level of interest in the Australian assets as “good" and was confident there would be no need to shut businesses down.

“These kinds of businesses don’t show up much. RBS have made it clear they’re a seller in almost any circumstances. If there isn’t an outcome then the likelihood is the business will get shut down. That attracts more people than less because it’s obviously not seen as a fishing exercise."

RBS is keeping its debt capital markets teams, its fixed income and currencies business and cash management services unit.